We're Wasting $750 Billion a Year on Health Care

The Institute of Medicine just came out with a report showing that the American health care system wastes an astonishing $750 billion dollars a year, one out of every three health care dollars spent. As Sarah Kliff explains, "So much wasteful spending leaves a lot of space for fixes. The Institute of Medicine recommends a number of solutions and many boil down to a pretty simple idea: Health care should be better-coordinated." There are a lot of ways to do that, but one particularly thorny problem is that doctors don't want anyone telling them what to do.

I remember as a kid watching "St. Elsewhere," and there was a scene in which a hospital administrator angrily chewed out a doctor over something or other. My mother, who spent most of her career as a hospital administrator, said ruefully, "Oh please. No administrator would ever get away with talking to a doctor like that." Part of the reason is that doctors are trained to believe that they're better and more important than ordinary people, and they rise up through a hierarchy in which they get progressively more respect and deference. The idea that some efficiency expert could come in and tell you that the way you're practicing your lifesaving craft is wasteful strikes you as not just stupid but insubordinate, because they can't possibly know all you know and so therefore your judgment is all but infallible. Thinking about this reminded me of Atul Gawande's recent article in the New Yorker suggesting that hospitals could learn a few things from restaurants like the Cheesecake Factory. This passage in particular was striking, about a doctor who is trying to systematize some of what his colleagues do:

"Customization should be five per cent, not ninety-five per cent, of what we do," he told me. A few years ago, he gathered a group of people from every specialty involved—surgery, anesthesia, nursing, physical therapy—to formulate a single default way of doing knee replacements. They examined every detail, arguing their way through their past experiences and whatever evidence they could find. Essentially, they did what Luz considered the obvious thing to do: they studied what the best people were doing, figured out how to standardize it, and then tried to get everyone to follow suit.

They came up with a plan for anesthesia based on research studies—including giving certain pain medications before the patient entered the operating room and using spinal anesthesia plus an injection of local anesthetic to block the main nerve to the knee. They settled on a postoperative regimen, too. The day after a knee replacement, most orthopedic surgeons have their patients use a continuous passive-motion machine, which flexes and extends the knee as they lie in bed. Large-scale studies, though, have suggested that the machines don’t do much good. Sure enough, when the members of Wright’s group examined their own patients, they found that the ones without the machine got out of bed sooner after surgery, used less pain medication, and had more range of motion at discharge. So Wright instructed the hospital to get rid of the machines, and to use the money this saved (ninety thousand dollars a year) to pay for more physical therapy, something that is proven to help patient mobility. Therapy, starting the day after surgery, would increase from once to twice a day, including weekends.

Even more startling, Wright had persuaded the surgeons to accept changes in the operation itself; there was now, for instance, a limit as to which prostheses they could use. Each of our nine knee-replacement surgeons had his preferred type and brand. Knee surgeons are as particular about their implants as professional tennis players are about their racquets. But the hardware is easily the biggest cost of the operation—the average retail price is around eight thousand dollars, and some cost twice that, with no solid evidence of real differences in results.

Knee implants were largely perfected a quarter century ago. By the nineteen-nineties, studies showed that, for some ninety-five per cent of patients, the implants worked magnificently a decade after surgery. Evidence from the Australian registry has shown that not a single new knee or hip prosthesis had a lower failure rate than that of the established prostheses. Indeed, thirty per cent of the new models were likelier to fail. Like others on staff, Wright has advised companies on implant design. He believes that innovation will lead to better implants. In the meantime, however, he has sought to limit the staff to the three lowest-cost knee implants.

So they keep coming up with newer and more expensive knee implants, and which one you get depends not on which one is actually the best, but which one suits the idiosyncratic tastes of your doctor. You'll never know, because chances are the doctor won't even talk about it with you. He'll tell you what he's putting in your body, but he probably won't tell you why he thinks this particular model is superior to the other dozen models on the market, in part because it would quickly become a pretty technical discussion. You'll just trust him on it, and if it costs thousands of dollars more than another model that's just as good, you'll never even know.

By the way, the Affordable Care Act included a number of provisions that would try to find ways to attack the problem of waste, most notably the creation of a board of experts whose job it was to figure out which treatments work and which treatments don't. The Republicans called that "death panels" and vowed to do everything they could to destroy it.

About the Author

Paul Waldman is a weekly columnist and senior writer for The American Prospect. He also writes for the Plum Line blog at The Washington Post and The Week and is the author of Being Right is Not Enough: What Progressives Must Learn From Conservative Success.